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Online lottery firm targets mobile internet sector in China

Xinhua

2014-03-23

09:31 (GMT+8)

A screenshot of an advertisement on 500.com's website. (Photo/500.com)

China's online sports lottery ticket vendor 500.com plans to add more social networking features to its lottery sales platform ahead of the FIFA World Cup and expects more sales from mobile devices, the company's chairperson Vincent Law said in an interview with state run Xinhua News Agency.

Law, chairperson of the Shenzhen-based 500.com, said the company expects to grow its user base during the soccer tournament in Brazil, however, he said the company had no specific sales target for the sports event.

"Soccer fans might not use our site to buy lottery tickets, but they can use our platform to network with other fans, and discuss matches or a particular player," Law said.

500.com sold more than 3 billion yuan (US$488 million) worth of sports lottery tickets to more than 20 million registered users last year and is now making a foray into the mobile internet sector.

The company signed an agreement in January with China Mobile E-commerce, the third-party payment subsidiary of China Mobile, the country's largest mobile operator in terms of subscribers.

The deal opens up a new payment channel for 500.com and could potentially boost its sport lottery sales on mobile devices. The payment service has monthly active users of 31 million and annual transactions hit 130 billion yuan (US$20.88 billion) in 2013.

Prior to this deal, 500.com also accepted payment through Alipay, the third-party payment service of Chinese e-commerce conglomerate Alibaba.

The company has both Apple and Android apps and has been working to incorporate its lottery ticket sales service on other popular apps with a broad user base, such as Alipay.

500.com is among the first batch of Chinese online lottery ticket vendors established in the early 2000s. It went public on the New York Stock Exchange in November 2013. Its share price more than doubled three months after its debut and hit US$51.37 per share in early January.

This strong performance shows investor confidence in the company and the potential of China's online lottery sector. Chinese regulators have also become more clear in their support for online lottery sales.

Two kinds of lotteries are legal on the Chinese mainland, one for welfare and the other for sports. Proceeds are used to fund charitable causes and mass sports education programs.

Lottery sales have grown more than 10% in China for the past decade and exceeded 300 billion yuan (US$48.19 billion) last year, up 18.3% from a year ago, according to Ministry of Finance statistics.

The ministry did not disclose the share of lottery tickets sold online. According to Shanghai-based consultancy firm iResearch, sports lottery sales on 500.com accounted for 29% of total online sports lottery sales in China during the first half of 2013.

The company said in its 2013 financial report that mobile-registered users accounted for 67% of active users during the fourth quarter of 2013 and their purchases represented around 18% of total lottery sales on 500.com.

A government-mandated ban on online lottery sales that went into effect on March 1, 2012 aimed to weed out illegal activities such as gambling and scams. 500.com said in its 2013 financial report that it voluntarily suspended online lottery ticket sales when the ban was introduced.

The company emerged from the shadow of regulatory uncertainty after the Ministry of Finance gave it the go-ahead to resume its online sports lottery ticket sales in November 2012.

Regulatory approval has allayed investors' concern that the company's development could be derailed.

An amended version of a regulation on lottery tickets in early 2013 granted legal status to online lottery ticket sales, adding to investors' confidence that the sector is set for robust growth in the years ahead.

So far 500.com is the only Chinese online lottery vendor that has gone public. Law said the move has had "a positive effect on the entire industry."

"Little is known about the online lottery industry. If there is any information, it's mostly negative. A public listing subjects the company to scrutiny from investors and regulators and offers greater transparency," he said.